FOCUS: INTERNAL COMMUNICATIONS - On a cultural collision course/Company mergers and acquisitions can make staff nervous but proper internal communications strategies can help. Nick Purdom reports

Mergers and acquisitions have become an intrinsic part of corporate life as companies seek to become more competitive. In 1995 to 1996 there were more than 3,000 mergers and acquisitions in the UK, according to Acquisitions Monthly On Line. ’Nowadays the question is who hasn’t gone through it?’ says Kevin Thomson, chairman of MCA, an internal marketing and communication consultancy which has helped many blue chip companies through what can be a traumatic period of change.

Mergers and acquisitions have become an intrinsic part of corporate

life as companies seek to become more competitive. In 1995 to 1996 there

were more than 3,000 mergers and acquisitions in the UK, according to

Acquisitions Monthly On Line. ’Nowadays the question is who hasn’t gone

through it?’ says Kevin Thomson, chairman of MCA, an internal marketing

and communication consultancy which has helped many blue chip companies

through what can be a traumatic period of change.



Poor communication was cited as one of the top five reasons for the

failure of a merger or acquisition in a study carried out by

Carlsberg-Tetley last year. ’You can’t change culture,’ says Thomson

’but you can change communication to bridge the culture gaps.’



He cites the case of a bank that took over another whose culture was

more staid. ’The acquisition was not handled sensitively and the ’you’re

going to do it like this’ method didn’t go down well with the acquired

bank. Eventually the acquiring bank realised it’d gone too far and went

into happy, clappy mode trying to buy-in support through a series of

roadshows with ice and smoke. Neither lasts very long - you don’t

actually change anything with a hyped-up programme.’



Countrywide Porter Novelli client services director Chris Woodcock

agrees: ’There are no quick fixes. Our experience shows that significant

internal culture change demands long-term commitment and a patient

strategy of top-down communications, motivation, training and

support.’



While change effects all employees, experts agree it needs to be led

from the top. ’Fundamental to communications in a merger and acquisition

is for all senior management to buy into a clear and crystallised

long-term goal for the business which can be quickly and clearly

communicated to all employees,’ says Woodcock.



Lorrie Arganbright, a director at MCA, worked on Novell’s acquisition of

WordPerfect in 1994. According to Arganbright, the two companies had

dramatically different cultures: Novell was older and more thorough

while WordPerfect was younger, more ’seat-of-the-pants’.



’We talked to staff at all levels and did a lot of listening. We set up

Issues Groups to focus on problems which helped us to form a

communications plan for senior management to address these

problems.’



MCA opened a three-way (top-down, bottom-up, side-to-side) internal

communications channel in 20 countries in Europe, the Middle East and

Africa which was sustained by local managers. An in-house journal was

introduced giving consistent messages and dealing with business issues

as research revealed this is what people wanted. Line managers took core

information and targeted it to the needs of their team. ’Staff were

hungry for face-to-face briefings; the higher the level of concern the

greater the interest in face-to-face communications,’ says

Arganbright.



The approach clearly paid off as initially only 20 per cent of staff

thought the acquisition was a good idea, but after six months 80 per

cent were in favour.



In common with Novell/WordPerfect, the acquisition of UK-based Hoskyns

by fellow IT services company Cap Gemini relied on good communications

through a company newsletter, supported by face-to-face briefings.



’The monthly newsletter was intended to provide a framework for

understanding and be a vehicle for two-way communication,’ explains

Rebecca Thomas, marketing manager at Cap Gemini. Staff were invited to

voice their concerns via a coupon in the newsletter or through a special

hotline.



’The bulk of the real work was getting teams of people together to work

through how things were going to be done - that’s the way we really

changed culture and thinking,’ says Thomas.



The programme at Cap Gemini was led by marketing communications

representatives from different companies in the group in Europe,

initially working together in Paris, but spending more time in their

local teams as the programme was rolled out. The core change programme

took almost two years to complete, proving the point that there are no

quick fixes.



One of the unfortunate side-effects of mergers and acquisitions is that

they often involve redundancies, presenting another major challenge to

internal communications. - how to retain corporate loyalty while friends

and colleagues are being laid off.



’Nowadays staff are half expecting redundancies so it’s important just

to tell them,’ says Kevin Thomson. ’Organisations are afraid of giving

bad news, but a Management Today survey three years ago confirmed that

the number one cause of stress in organisations is lack of

communication.



If you couch the announcement in terms of ’we’ve spoken to everyone and

they realise the savings that can be made by putting together the two

organisations’ there’s a huge difference in the way it will be

received.’



Job losses resulting from the Novell acquisition of WordPerfect were

dealt with head-on. ’If you present people with reasons, it makes sense

for the business and if you handle things compassionately, people are

more likely to buy into it,’ says Arganbright. ’We dealt with

redundancies as directly as we could on a local basis because people

want to hear from their own line manager.’



Once redundancies have been dealt with quickly, and fairly, then you can

get on with the real communication job of getting remaining employees to

buy into a programme of culture change. ’Employees who feel secure about

their job are more committed and more likely to stay,’ says Phillip

Festa, director of culture change specialist MSB - who has recently

written a report in conjunction with consultant Thora Thorsdottir called

Profitable People? - The People Factor in Mergers and Acquisitions.



Thomson agrees that involving employees is one of the keys to

success.



’You need to continue to listen and involve your people in the business

so they gain a sense of ownership. You also need to show what’s

different in the new company and demonstrate the benefits,’ he says.



The merger of three pharmaceutical companies from different countries

provided a particular communications challenge for MCA. German-owned

company Hoechst UK merged with French company Roussel. A year later this

company merged with US-owned Marion Merrell Dow to form Hoechst Marion

Roussel (HMR). One employee commented: ’The old cultures have gone but

there is no clear HMR company culture to replace them.’



MCA implemented what it brands ’Team Listening’ to encourage upward

feedback and make staff feel that their views count. ’All the managers

agreed that such a system had to be active in its approach, unlike the

passive communication that takes place during traditional team

briefing,’ says MCA’s Lin Johnston.



Team Listening was a big hit with staff, with 96 per cent saying that

they felt the process was useful.



Communicating cultural change is fraught with difficulties, but the

rewards can be immense. As Festa points out: ’The challenging and

reassessment of the deepest, most taken for granted assumptions in an

organisation is one of the greatest sources of potential benefits.’



CASE STUDY: ERNST AND YOUNG TAKES A DISCIPLINED APPROACH



Professional services firm Ernst and Young employs about 6,500 people in

27 offices in the UK, almost half in London. Two years ago the company

decided to restructure its London offices to focus on industry

sectors.



This meant reorganising more than 2,000 staff who were used to working

in discipline-focused units such as tax advice, auditing and

consultancy.



Now a little over 18 months since the new structure came into place,

head of internal communications, Edmund White, has no doubt that

’successful implementation was due in large part to using the internal

communications channels we had created to gain buy-in through proper

tested understanding of the issues and of the impact of the proposed

change’.



These communications channels consist of three networks or groups

created to encourage the flow of information around the group and to

invite ideas and discussion.



The Strategy Implementation Group consists of about 30 senior staff

including the UK Executive and heads of major business units and

national departments including internal communications. It meets several

times a year. ’The group acts as a sort of strategy think-tank, but each

member is charged with considering the communication aspects of any

particular strategy,’ explains White.



The Leaders for Change network encompasses the Strategy Implementation

Group plus about 70 managers of UK offices and nationally-based

businesses.



Every few months the group meets for a two-day workshop to consider how

to implement business strategies.



The most important communications network, however, is the Internal

Communications Managers group - 45 managers and senior managers who make

sure information is available from the centre and act as a focal point

for feedback on how information has been received. It also works closely

with local managers to assess the impact of strategic decisions and to

determine appropriate means of communication.



This role is voluntary and takes up about 300 hours a year, but is now

highly prized. ’It’s a high profile role which is used by both the firm

and the individual to add to personal development,’ says White. Several

times a year the Internal Communications Managers group meets for

training in communication techniques and to exchange ideas. At other

times a Lotus Notes discussion database is used to exchange experiences

and best practice.



White believes the networks played a crucial role during Ernst

andYoung’s successful restructuring in London. ’The Leaders for Change

meetings provided the opportunity to develop deeper understanding of the

business reasons for the reorganisation and to build commitment. The IC

managers facilitated communication at local level aided by printed

materials and supported by planned briefings with opportunities for

discussion and feedback.’



One senior manager commented: ’The London reorganisation has been

communicated excellently. There have been very few undercurrents of

negativity. People realise it is a good idea. Previously decisions came

down through rumours.



Now there is far more involvement at lower levels.’



CASE STUDY: IDV EXPERIMENTS WITH THE FORMAL AND INFORMAL



In 1996 Grand Metropolitan-owned IDV appointed its first director of

internal communication, John Harben, and began a transformation

programme under a new chief executive officer, Jack Keenan.



Harben works in group corporate relations under director Charles Anson

and has a GrandMet-wide mandate which includes Burger King and Pillsbury

as well as IDV - a total of 62,000 staff in more than 50 countries.



Harben’s central tenet is ’Formal media will only take you some way,

informal communication will usually take you much further’. He is a

great believer in face-to-face communication and what he calls

’story-making’.



’Leaders need to be attentive to the stories they tell and the stories

they live,’ says Harben. ’We all prefer leaders to tell good

stories.



Research tells us that staff have a keen appetite for stories about

’what’s going on around here’ and for hearing them first hand.’



Harben has introduced a range of informal communications activities at

GrandMet including senior leadership meetings and results-based team

briefings backed by what he describes as ’massive conversational, fax

and e-mail traffic’.



The key to success, believes Harben, is the understanding, involvement

and commitment of people in business teams to organisational

communication.



While informal communication is evolving, formal communication is also

changing. A glossy house journal has been introduced containing news and

information as research showed this was what staff wanted and an

Intranet is being launched.



Harben’s vision is a mix of formal and informal communications based on

strategic thinking. ’If leadership teams could be persuaded to end every

meeting by asking ’what do we communicate from this meeting?’ then we

can help ensure that strategic messages are clearly defined and

limited,’ he says.



’As leaders talk and listen, we can carry the messages in formal media

and gather feedback. At the next meeting the leadership can reflect on

what they hear and re-define the messages in what can become constant

and powerful feedback loops.’



CASE STUDY: SHEPWAY SEEKS INVESTORS CREDENTIALS



Investors in People is an initiative that’s bandied about a lot, but one

that can cause confusion and suspicion among staff. This is what Shepway

District Council found when its assistant chief executive Stephen Hagues

started to work towards accreditation in 1995. ’From the employees point

of view IIP meant a decent pay rise, shorter working hours, more

training and a space in the staff car park,’ says Hagues.



Paul Lloyd, consultant with the Office for Public Management which

helped Shepway in its bid to achieve IIP, warns of the dangers of

regarding IIP merely as a label or trophy. ’The message must be a lot

more than just marketing hype. It’s no good just relying on the IIP

label branded on mugs, pencils or posters to do the real job of

convincing people and expecting instant commitment.’



When it came to communicating IIP, Shepway had to overcome the legacy of

poor internal communications in the past. Hagues describes the council

in the 1980s as ’very traditional and highly bureaucratic; managers were

seen as godlike figures and if you were called in to see them you knew

it was serious trouble’.



Attempts to improve the situation were made in the early 1990s, with a

new structure based on 19 business units and a programme of management

development. But Hagues admits: ’It wasn’t working. Morale was low,

people were cynical and felt the changes were the latest management

fad’.



It became clear to management that the key to improving the organisation

was better communication. ’No matter what business plans or appraisal

systems we had in place, unless we communicated well with employees none

of this would truly work,’ says Hagues. So a cross-section of the

organisation was brought together to work with the chief executive and

management team to devise an IC policy and strategy as part of the drive

towards IIP.



Specific initiatives included personal portfolio records for everyone

containing full details of training, appraisals and even pensions. ’It

was the first tangible evidence the council was giving something back to

them,’ says Hagues.



What he describes as ’softer changes’ were also made. Managers started

walking around the office, talking to staff and involving them in

decision making. They even spent time on reception. Minutes of

management meetings were circulated, taking away some of the barriers

and mistrust that had developed.



Another sign of management’s new attitude came when it took the brave

decision to track down the editor of an underground staff newsletter

that had been circulating and make him the editor of the official staff

newspaper.



’The new newspaper is sometimes a little painful for management, but

staff really approve,’ says Hagues.



The new style of IC has been critical in helping Shepway achieve

IIP.



’Effective communication is inherent in what IIP sees as its ultimate

goals - effective teamworking, valued training and real development of

the workforce, improved organisational and individual performance, and a

genuine mutual feeling of value and worth by both employers and

employees,’ concludes Lloyd.



Shepway District Council conducts an annual survey of staff and a real

sign that IC has improved is revealed by responses to the question ’How

far do you believe the information supplied by management?’. In 1994, 50

per cent said ’always’. By 1996 this had risen to 90 per cent.



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